The Khoza connection

An investment company that had former Eskom chairperson Reuel Khoza as executive chairperson benefited to the tune of R65-million after IST Holdings, a JSE-listed company in which it held a 28% stake, was awarded a R260-million contract by Pebble Bed Modular Reactor (Pty) Ltd.

IST Holdings was purchased and delisted in October last year by a consortium led by Ethos Private Equity.

Khoza, a former director of IST, was chairperson of Eskom in August 2003 when IST’s nuclear division was awarded a R260-million contract to work on the design of the pebble bed modular reactor.

He became a shareholder in IST when Coordinated Network Holdings, a company in which he is a partner, bought 29% of the equity for R15-million.

This stake was worth R80-million when bought by Ethos.

Khoza also served on Eskom’s nuclear oversight committee. Eskom has a 40% stake in reactor company PBMR (Pty) Ltd.

Khoza stepped down as a director of IST Holdings when the company listed on the JSE in September 1998, but maintained an interest in IST through his investment companies Coordinated Network Investments (CNI) and AKA Capital, a wholly owned subsidiary of CNI.

At the time of listing, Khoza’s CNI held a 29% share in IST and in 2001 purchased further shares through AKA Capital.

The R260-million contract was IST’s biggest and caused its share price to rise 11c a share to R1,50 after the contract was announced.

Just more than a year later a consortium lead by Ethos Private Equity and including ICT Arusha and IST management bought IST Holdings at R2 a share and delisted the company.
At the time of purchase IST had 143,5-million issued shares.

CNI’s 28% stake would equate to just more than 40-million shares, which, at R2 a share, would make CNI’s shares worth R80,4-million to be split between the three CNI partners, Khoza, Sam Nematswerani and Gary Morolo.

Khoza did not return the Mail & Guardian‘s calls this week but has previously said that he had no control over the day-to-day running of Eskom and had declared his outside interests to Eskom and the government.